• November 5, 2024

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Negotiating the Future of Iran Sanctions, the White House Stumbles

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This past Wednesday, the Wall Street Journal reported that the United States was set to impose additional designations on certain entities and individuals involved in Iran’s ballistic missile program. By Thursday evening, the Wall Street Journal was reporting that the White House had delayed the imposition of the sanctions with no timetable set for their announcement. So what happened in the meantime?

That much remains unclear. According to initial reports, the sanctions designations were set to be announced as early as Thursday morning and as late as next week, as the White House sought to respond to recent Iranian ballistic missile tests and to mollify its critics in Congress who believe that the Obama administration is taking too soft a line to various Iranian infractions of UNSC resolutions following the recent nuclear agreement. The new sanctions designations – to be imposed under the authority of Executive Order 13382 – would target a Dubai-based trading company, a related Hong Kong-based company, and certain Iranian individuals that are part of Iran’s Ministry of Defense and Armed Forces Logistics (“MODAFL”).

By late Thursday evening, however, the Wall Street Journal was reporting that the White House had apparently backtracked on its intention to impose additional designations on Wednesday and would delay the imposition of such sanctions for an indeterminate period of time. It is unclear what provoked this delay, although Iran’s President Hassan Rouhani (and other critical figures of Iran’s political establishment) had responded to the initial news of additional designations by publicly ordering Iran’s defense ministry to “expedite” its development of Iran’s ballistic missile capabilities. Based on White House emails obtained by the Wall Street Journal, the decision to delay the imposition of additional designations took place between 10:30 am and 10:00 pm Wednesday, during which time the White House’s plans had become public knowledge.

Privately, I had heard that additional designations were in the works, but that the White House would take a more considered approach to their eventual roll-out. In other words, the White House would not be encouraged to engage in a tit-for-tat with Iran, in which Iran conducted a ballistic missile test in potential violation of UNSCR 1929 and the Obama administration was expected to respond with further sanctions designations. Considering the intense pressure brought to bear on the White House from certain Members of Congress, however, the Obama administration looks to have had its hand forced into more expedited action. That might explain the stumble and fumble that the White House looks to have made yesterday.

This goes to show how contentious the sanctions issue will be as the nuclear deal is set to be implemented in the weeks ahead. While the nuclear agreement does not expressly forbid the United States from imposing sanctions on Iran for non-nuclear activities, the Obama administration will have to be considerate of the fact that, should the U.S. impose sanctions that limit the benefit of the bargain to Iran of pending sanctions relief, Iran’s incentive to continue complying with the restrictions placed on its nuclear program threatens to be undone. Meanwhile, Congress is likely to continue to press the Obama administration to step up pressure on Iran, particularly as Iran engages in further ballistic missile tests and regional activities that are anathema to U.S. security interests.

In other words, there’ll be a constant negotiation by the White House over how to utilize the sanctions tool when it comes to Iran. Over the past 24 hours, we’ve already seen the White House stumble its way out of one particular negotiation.

Tyler Cullis

Mr. Cullis is an Associate Attorney at Ferrari & Associates, P.C. where he is engaged in the practice of U.S. economic sanctions, including trade compliance, regulatory licensing matters, and federal investigations and prosecutions. Mr. Cullis has extensive experience counseling clients on matters falling under the purview of the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the U.S. Department of Commerce’s Bureau of Industry and Security (BIS). He has provided counsel to U.S. and foreign parties on complex cross-border transactions and compliance with U.S. economic sanctions; conducted corporate internal investigations and developed sanctions compliance policies; and submitted license applications and voluntary self-disclosures to OFAC. Mr. Cullis has advised global financial institutions, multi-national corporations, U.S. and foreign exporters and insurers, as well as private individuals regarding U.S. sanctions matters, including matters involving Russia, Iran, and Cuba.

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